There is something wrong with advertising:

• Consumers are trained to tune out advertising because it is annoying. Why should I pay attention to an ad when I am watching a video on Hulu? I am trying to be entertained, not watch a promotional pitch. Tools that allow consumers to skip advertising are very popular. Have you ever started flipping channels as soon as there was a commercial break on TV? There are others that are gaining popularity. I use the Firefox extension Adblock to block internet ads. DVRs allow people to skip forward.
• Even the ads that consumers pay attention to are not very effective because consumers don’t trust information that they receive from the advertisers. I have had poor experience with airlines – flight delays, cancellations, lost baggage… - the list goes on. Why would I trust an airline ad that promises a great experience? In general, we expect advertisers to make exaggerated claims (that are not true) about their products.
• Most advertising that consumers see is not relevant to their needs so they miss the advertisements that they may have otherwise been interested in. If I am looking to buy a new computer, computer ads are all that I want to see. If the webpage or the television show makes me watch nine other ads along with a computer ad, I am almost certain to miss the computer ad.

Advertisers cannot track effectiveness in most mediums – print, television, outdoor advertising or product placement. They can track effectiveness somewhat with web advertising. Within web advertising only search advertising is effective. Banner ads or content ads are much less effective. A click through rate of 0.2% on a banner ad is considered very good. Yet we see plenty of banner ads. Google’s Adsense is extremely popular. In other words, most advertising dollars are wasted and advertisers can do little about it. Yet, advertising as a percentage of GDP has stayed pretty much constant over the last 60 years at around 2.2%. Wasting most of your advertising dollars does not seem smart.

Customers have purchasing criteria for a particular good or service. Teenagers want to drink the coolest drink. People look for certain features in a cell-phone before they get it. Some people are just looking for deals. The economic purpose of advertising is to distribute information regarding the purchasing criteria to consumers. Consumers also get their information from other sources. Before purchasing a product on Amazon, I read the reviews. If the item I am purchasing is a big ticket item, I might do an even more extensive research on the Internet or ask friends. In making a purchasing decision, a consumer is looking for unbiased information. While advertising helps disseminate some information, the information is mostly discounted.

It is clear that advertising is broken. Still, companies are going to continue to advertise till someone figures out a better way to communicate unbiased information to consumers.

From TechCrunch comes the story:

I wonder why Google did not advertise on the market leader Yandex. Does Google not believe that it is cheaper to advertise online or did they hire incompetent marketing managers in Russia? Clearly the only people who will go to Google are the ones who are online. Why would you ever advertise offline?

A brand is consistency of experience. You should know what you will get when you purchase that brand. Any time this consistency is violated, the brand is weakened.

This post is meant for everyone in the technology world who has no idea what marketing is. This includes most engineers, consumers, sales people and marketers themselves.

What is marketing?

Marketing involves

1. understanding the needs of the customers
2. focusing on a product or a service to fulfill those needs
3. communicating the value of the product or service to consumers

in that order.

What is not marketing?

Marketing is not advertising. Marketing is not creating hype around a product that does not serve market needs. Marketing is not creating meaningless jargon and slogans around your product hoping someone will understand or appreciate them. Many of these incorrect notions arise from lack of understanding of marketing by marketers themselves.

When marketers don’t know what to do, they try to throw darts hoping that at least one dart will hit the target. The darts include doing things like advertising, tradeshows, email blasts, white papers, and publishing meaningless jargon on the website. Most of these things do not work. It is no wonder that people in the technology industry have such poor opinion of marketers.

Engineering or sales driven organizations

In one of the marketing seminars by Pragmatic Marketing, Adelle Revella gave a reason for why marketing is such a neglected function in most technology companies. Most companies begin their life as a bunch of engineers furiously working to build a product that they think is cool. Once they build the product, sometimes they are able to develop something that works for a few customers. They then hire a bunch of sales people to go and sell the product. The sales people need assets and collateral. The company then hires marketing people to support the sales people. These organizations either continue to remain engineering driven or become sales driven. They either focus only on the features that the engineers think of or focus on features that big customers specify.

Marketing as a competitive advantage

Companies need to treat marketing as an important, strategic function. In the technology world where most companies treat marketing as an afterthought, the opportunity for gaining competitive advantage through marketing is tremendous.

What is not a brand

Most technology companies do not understand what a brand is. They often focus solely on the representations of brands:

• A logo is not a brand. Often brands are recognized by logos, but logos are not brands. A consulting company called Interbrand publishes an annual ranking of the best global brands. In their 2007 rankings, Microsoft was the second most valuable brand in the world with a brand value of $59 billion. Do you remember what Microsoft’s logo looks like? I didn’t remember it till I looked for it on their website.It doesn’t even seem to matter what the logo looks like.I find the IBM (rank 3rd) and Google (ranked 20th) logos quite ugly (others may disagree). And yet, companies spend an inordinate amount of time and energy on creating a logo.
• A name is not a brand. Would Google, Yahoo or IBM brands be any less powerful if they were called something different?

What is a brand?

Seth defines brand as follows:

I think it is the product of two things:
[Prediction of what to expect] times [emotional power of that expectation].

So what should the companies focus on when they look to create and maintain a brand? Here the the three questions the companies need to answer:

• Who are you trying to target? A brand has a meaning only for the target segment that you are serving.
• What is the promise of your brand? Be clear about the key benefits you promise to deliver.
• Why should the consumers believe your story? You need to supply consumers with proof so that they believe your story.

In future posts I will give some specific examples of these three components of brand strategy.